Budget airline AirAsia said today its profits rose 26 percent in the three months to March, as it defied the economic downturn and boosted passenger numbers.

"AirAsia once again delivered record profit growth despite operating in one of the most challenging economic environments," chief executive officer Tony Fernandes said in a statement.

The carrier posted net profits of RM203.2 million for the first quarter, compared with RM161.3 million a year earlier.

tony fernandez Fernandes said that passenger numbers for the period grew by 21 percent to 3.1 million as the carrier captured market share from competitors and pursued an aggressive route expansion plan.

The Malaysia-based carrier has had a bullish outlook despite the economic downturn, saying it will benefit as cash-strapped travellers switch to low-cost carriers instead of fully fledged airlines.

Average fares rose by 4.5 percent and the airline also benefited from the introduction of schemes to allow passengers to pay a fee to choose their seat and upgrade their baggage allowance.

AirAsia sank into the red in the fourth quarter last year, but blamed the loss on one-off fuel hedging costs and said its performance had otherwise been "phenomenal."